Advertisements for credit and mortgage loan products are seen in Seoul, Wednesday. Yonhap

High housing and education costs are making it difficult for middle-income households to save money as they struggle to catch up with more wealthy households amid a widening economic gap, government data showed Monday.

According to the Korean Statistical Information Service, a website run by Statistics Korea, households that belong to the third group of the five tiers of income brackets had net savings worth 658,000 won ($448) in the fourth quarter of 2024.

Net savings refers to the amount of cash available after deducting all living expenses, including taxes, insurance, interest and debts, as well as the cost of food, transportation and education. The term is more narrowly defined than disposable income, which only excludes mandatory deductions, such as taxes and debts.

The October to December period net savings for households in the third tier dropped by 88,000 won from a year earlier, marking a steady decrease since the third quarter of 2022.

Notable, it was the first time in five years the amount fell below 700,000 won.

The third-tier households were the only group among the income brackets whose net savings decreased for the past three straight quarters.

"Based on the data, the middle-income households appear to be spending more money on housing and education than they can afford, in a desperate bid to not fall behind in the middle of growing inequalities," said Hanyang University economics professor Ha Joon-kyung.

The professor pointed out that while more than 50 percent of the third-tier households own their home, many of them took out housing loans to do so.

He also said the group is "willing to spend money on tuition as well as private classes as much as more wealthy households would do."

"Such spending pattern is extremely pressing for the households and they are left with a limited amount of extra cash," Ha said.

Speaking on condition of anonymity, a researcher at the Institute for Korean Economy and Industry said a decline in net savings for middle-income households can "add to woes in the Korean economy."

"The group's financial collapse would exacerbate household debts and dent sluggish private spending," the researcher added.